Exam 10: Measuring a Nations Income: Part B

Expenditures by households on education are included in the investment component of GDP.

If Brazil buys $100 million of tractors from the U.S. ,then U.S.net exports will decrease.

U.S.GDP excludes the production of most illegal goods.

Macroeconomic statistics tell us about a particular household,firm,or market.

Disposable personal income is the income that households and noncorporate businesses have left after satisfying all their obligations to the government.

Typically in countries with lower levels of real GDP person,a smaller percentage of the population is literate.

If nominal GDP is $10,000 and real GDP is $8,000,then the GDP deflator is 125.

The government computes measures of income other than GDP because these other measures usually tell different stories about overall economic conditions.

GDP is a good measure of economic well-being for all purposes.

Other things equal,in countries with higher levels of real GDP per person,life expectancy and literacy rates are higher than in countries with lower levels of real GDP per person.

Additions to inventory subtract from GDP,and when the goods in inventory are sold,the reductions in inventory add to GDP.

If consumption is $4000,exports are $300,government purchases are $1000,imports are $400,and investment is $800,then GDP is $5700.

The overall effect of accounting for purchases of foreign goods in GDP reduces GDP.

GDP adds together many different kinds of products into a single measure of the value of economic activity by using market prices.

GDP does not make adjustments for leisure time,environmental quality,or volunteer work.

If real GDP is higher in one country than in another,then we can be sure that the standard of living is higher in the country with the higher real GDP.

Macroeconomics is the study of the economy as a whole.

At a rummage sale,you buy two old books and an old rocking chair;your spending on these items is not included in current GDP.

If the GDP deflator in 2009 was 160 and the GDP deflator in 2010 was 180,then the inflation rate in 2010 was 12.5%.

Real GDP evaluates current production using prices that are fixed at past levels and therefore shows how the economy's overall production of goods and services changes over time.